Coffee Production in Kigoma Region, Tanzania: Profitability and Constraints

Abstract

Coffee is a major source of income for millions of smallholder farmers worldwide and is a significant source of export earnings to many nations including Tanzania. Coffee is one of Tanzania’s primary export crops representing about 5% of total export, 24% of traditional crops and generating exporting earning averages US$ 100 million per annum over the last 30 years (TCB, 2011). Smallholder coffee farmers in Tanzania are constrained with different production and marketing problems which lower farmers` profit. This paper evaluates the profitability of coffee production as well as constraints that farmers face during the production process. The paper makes use of data collected from a sample of 122 farmers. The data were analyzed using the gross margin approach and the results were summarized using descriptive statistics such as frequency distribution, percentage, means, minima and maxima. The results show that farmers in Kigoma Region earned a gross margin of Tanzanian shilling 730 per tree per annum. Farmers processed at CPU gained about TZS 1350/kg as coffee improvement gain. Coffee production contributed about 39% of the total household income in the region. Input prices, taxes, research contribution and Central Pulpery Unit tax, shortage of extension services, unreliable markets and low coffee price, low quality of coffee, transportation and delayed payment constituted the major problems that faced coffee producers. The paper recommends that different stakeholders have to take actions that make coffee sector more profitable to improve the livelihood of the growers. Also availability of capital strengthened economic activities diversification to reduce risks of crop failure. Lastly, Farmers should be encouraged and facilitated to use CPU effectively to improve coffee quality.

Key word: gross margin, quality improvement, Kigoma